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Northville-based Algal Scientific Corp., a manufacturer of algae-based chemicals for the food and beverage industries, announced Tuesday that it has completed a $3 million venture capital round, led by German-based Evonik Ventures, San Francisco-based Formation 8 and Chicago-based Independence Equity.

Also participating in the round were Farmington Hills-based Envy Tech Fund I, the Michigan Economic Development Corp., the Michigan Pre-SeedCapital Fund and the Detroit-based First Step Fund.

Algal Scientific won the first-place prize of $500,000 at the 2012 Accelerate Michigan Innovation competition in Detroit. It makes an algae-based compound called beta-1,3-glucan, a nutritional additive for poultry, swine, aquaculture and other livestock production and human foods.

The compound has long been known to boost immune systems and has been well researched, but until Algal was started, the compound was too expensive for commercial use.

Geoff Horst

“The completion of this funding allows us to begin the commercial-scale production and marketing,” said company founder and chief science officer, Geoff Horst, in a news release.

He founded Algal in 2009 after winning $65,000 and first place at the inaugural DTE Clean Energy Competition hosted by the University of Michigan and DTE Energy.

The company grew out of a Ph.D. project at Michigan StateUniversity by Horst. At the time, the business plan was to commercialize a fermentation process for using algae to reduce phosphorous and nitrogen in wastewater.

But as that market proved difficult to crack, the company made an important pivot toward a new market.

“It’s the biggest lesson for every entrepreneur: Be married to your market and not to your idea,” Mahendra Ramsinghani, then the managing director of the First Step Fund, told Crain’s after Algal’s win at Accelerate Michigan.

Algal was one of the first tenants at the Michigan Life Science andInnovation Center, a tech incubator on a former Pfizer Inc. site in Plymouth Township. Early this year, having outgrown its labs there, Algal moved into a larger facility in Northville.

The First Step fund made an investment of $50,000 in Algal Scientific before it reinvented itself and another $50,000 following its reinvention.